The U.S. online grocery market ended August 2024 with $9.9 billion in monthly sales, a 7% increase over last year, as all three fulfillment methods posted year-over-year (YOY) sales growth according to the Brick Meets Click/Mercatus Grocery Shopper Survey fielded August 30-31, 2024.
August also marked the third month of high-single-digit sales gains for online grocery in 2024, primarily driven by solid promotional efforts for subscription and membership programs that started in May.
While each fulfillment method grew, delivery contributed more than half of the monthly sales gains, increasing 10.2% versus last year to $3.9 billion, propelled by a continued surge in the number of monthly active users (MAUs).
Ship-to-Home accounted for over one-fifth of the sales gains, climbing 8.9% YOY to $1.8 billion as significantly higher average order values (AOV) more than offset flat MAU growth and a drop in order frequency.
Pickup finished the month up 3.5% to $4.3 billion as moderate MAU expansion countered a pullback in order frequency, and AOV finished up by 3.5% compared to last year.
“Achieving growth will only get more challenging for grocers that don’t have a competitive offering or ways to offset the discounts,” said David Bishop, partner at Brick Meets Click. “Converting a customer into a member/subscriber motivates them to buy more frequently, especially given that most firms promote ‘free’ delivery. Even though there’s a cost to join, explicit fees are an ongoing source of friction many shoppers want to avoid.”
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As background, the special offers and promotions made by various players over the past several months have mainly focused on delivery services.
Beginning in May 2024, Instacart offered 80% off its annual membership. Walmart followed shortly after and promoted a 50% discount on its membership program. Then, in July and August, Walmart and other competitors such as Amazon and SpartanNash featured similar deals, with some offers targeting specific segments like students and teachers for the back-to-school season.
“We know regional grocers are facing increased competition from retail giants like Walmart and Amazon, who can leverage huge pools of CPG ad monies to sustain aggressive promotions and capture more share of the online grocery business,” said Mark Fairhurst, Chief Growth Officer at Mercatus. “Regional grocers should play to their strengths in fresh foods, private label, and convenient locations while investing in targeted promotions that resonate with existing customers. Creating stronger customer connections via relevant, personalized engagement is vital for building loyalty and competing digitally today.”